Lehman Brothers fell in the credit crunch: today the Bank for International Settlements warns that even apparently well-capitalised banks still have 'outsize derivatives positions'. Photograph: Toru Hanai/Reuters

There was a famous moment when the Queen asked, within the sacred portals of the London School of Economics, why no one had warned her about the financial crisis. In fact, there were many expressions of uneasiness in the runup to 2007-08, but I know of nobody who thought it would be quite as bad as this. After all, my generation of economists and politicians was brought up in the belief that nothing like the economic catastrophes of the 1920s and 30s would ever be allowed to happen again.

One institution that repeatedly sounded warnings about the dangers of the credit boom and asset price speculation in the middle of the last decade was the Bank for International Settlements (BIS), based in Basle, Switzerland – or Basel, if you prefer the German version.

The BIS has a historical memory of crises. And it certainly ought to. After all, it was founded between the wars to handle German reparations. The fact that it is still with us is a tribute to the staying power of institutions that outlive their original purpose – although the way things are going, who knows what it might be called upon to handle in years to come?

At all events, the BIS is known as "the central bankers' bank". The central bankers of the world meet there most months, and the BIS has been heavily involved in the various efforts to improve the rules for the regulation of banks and other errant financial institutions.

One of the high spots of the BIS's year is the publication of its annual report, which is always a model of clarity and comprehensible analysis. It was in this report that the BIS issued warnings to which, frankly, its member central banks, obsessed with the prevailing fashion of inflation-targeting, paid too little attention during the boom. There were even rumours that BIS staff were leant on to tone down their alarmist conclusions.

Enter the BIS, with the bald statement that "the world is now five years on from the outbreak of the financial crisis, yet the global economy is still unbalanced and seemingly becoming more so as interacting weaknesses continue to amplify each other".

The BIS, which is in a better position than other institutions or individuals to know, concludes: "Despite the progress on recapitalisation, many banks remain highly leveraged, including those that appear well capitalised but in fact have outsize derivatives positions."

It appears that the banks, like the Bourbons, have "learned nothing and forgotten nothing". "Big banks continue to have an interest in driving up their leverage without enough regard for the consequences of failure: because of their systemic weight, they expect the public sector to cover the downside."

Writing within weeks of the news of the enormous "trading" (or betting) losses at JP Morgan, whose chief executive Jamie Dimon was leader of the Wall Street pack in opposing sensible regulatory reforms, the BIS notes: "Another worrying sign is that trading, after a brief crisis-induced squeeze, has again become a major source of income for large banks."

Not to put too fine a point on it, the financial sector is moving "towards the same high-risk profile it had before the crisis".

This, then, is the financial background to all those attempts to patch up the eurozone and get the world's advanced economies moving again. Another crisis while this one is not even halfway through? As the Australian comedian Bill Kerr used to say: "I don't want to worry you, but …"

However, great though my respect is for the BIS's analysis of the financial scene, its recipe for broader macroeconomic policy is all too reminiscent of the kind of policy mistakes that were made when it was first set up all those years ago.

Noting the simultaneous deleveraging taking place in the private and public sectors, it is nevertheless so concerned about levels of public sector debt – and prospective further strains from spending on pensions and healthcare – that it backs the current fashion for cutting back the public sector when basic Keynesian economics teach us that the public sector should be counterbalancing the depressing impact of private sector retrenchment.

Unfortunately George Osborne's obsession with deficits rather than output and employment is shared by centre-right governments around Europe, and not exactly helping efforts to resolve the eurozone crisis. My fear is the onset of a deflationary spiral.